Gas

Description

Background and history

168. Gas is also an important input for the provision of energy-intensive and energy-utilising services. This section focuses on the infrastructure that supports the production and transmission of gas.

169. The discovery of natural gas at the Kapuni gas field in Taranaki in 1959 was the first commercially viable find in New Zealand. In 1969, a pipeline was constructed from Kapuni to Auckland and Wellington, which has now been extended as far as Gisborne and Hastings in the east, and Kauri in the far north. Also in 1969, the major Maui offshore field was discovered.

170. Natural gas became an important fuel for residential, commercial and industrial uses. In particular, it became a large resource for electricity generation and the petrochemical industry.

171. The gas industry comprises:

• Fields;
• Producers;
• Wholesalers;
• Transmitters;
• Distributors;
• Retailers; and
• Consumers.

Assets

Production

172. There are 14 fields and wells that produce gas in New Zealand, all in the Taranaki region, with production dominated by the Pohokura (40.6 per cent) and the Maui (29.8 per cent) fields, as shown in the following figure.

173. Shell-and Todd Energy-owned subsidiaries control the majority of the gas production market.

Gross Gas Production by Field for 2008

Source: Ministry of Economic Development: New Zealand Energy Data File 2008

Transmission

174. There are more than 3,400 km of high-pressure gas transmission pipelines in New Zealand. There are more than 2,800 km of intermediate, medium and low pressure distribution pipeline networks in the North Island, which are connected to the high-pressure system.

Institutional arrangements

175. The natural gas industry in New Zealand has undergone considerable reform and restructuring since the mid 1980s. In 1992, a new Gas Act deregulated the gas sector, abolishing exclusive area retail franchises for gas utilities and price controls on gas.

176. The impending depletion of Maui gas[41] and transition to future reliance on a wider range of gas sources, environmental and sustainability requirements, the need to facilitate competition, and a requirement to establish a fair and open industry governance framework led to a government review of the sector in 2001.

177. This resulted in the establishment of the Gas Industry Company. This is a co-regulatory body, which can make recommendations to the Minister of Energy on a wide range of industry matters, including the making of rules and regulations regarding the wholesaling, retailing, transmission, processing and distribution of natural gas[42].